When located next to chromosomal elements such as telomeres, genes can be subjected to epigenetic silencing. In yeast, this is mediated by the propagation of the SIR proteins from telomeres toward more centromeric regions. Particular transcription factors can protect downstream genes from silencing when tethered between the gene and the telomere, and they may thus act as chromatin domain boundaries. Here we have studied one such transcription factor, CTF-1, that binds directly histone H3. A deletion mutagenesis localized the barrier activity to the CTF-1 histone-binding domain. A saturating point mutagenesis of this domain identified several amino acid substitutions that similarly inhibited the boundary and histone binding activities. Chromatin immunoprecipitation experiments indicated that the barrier protein efficiently prevents the spreading of SIR proteins, and that it separates domains of hypoacetylated and hyperacetylated histones. Together, these results suggest a mechanism by which proteins such as CTF-1 may interact directly with histone H3 to prevent the propagation of a silent chromatin structure, thereby defining boundaries of permissive and silent chromatin domains.